Managing employee absenteeism at Exxon Mobil Oil Company

Pilot Project: Managing Absenteeism at Exxon Mobil Oil Company

Today, Exxon Mobil (hereinafter alternatively "Mobil" or "the company") is the world's largest publicly traded international oil and gas company (About us, 2010). The company competes on a global basis in the exploration, production, transportation, and marketing of crude oil and natural gas, as well as the manufacture, transportation and sale of various petroleum-based products (Company profile 2010). The company's holdings are valuable and extensive, and at the end of 2009, Mobil operated more than 16,500 gross and 13,700 net-operated wells (Company profile 2010). Besides its domestic operations in the United States, Mobil also maintains corporate offices in Africa, Canada, Europe, the Asia Pacific, the Middle East, Russia/Caspian region, and South America (Company profile 2010). With tens of thousands of employees working in these far-flung regions of the world, it is not surprising that effective human resource management (HRM) practices represent a vitally important element in the company's performance management system. One important feature of an effective HRM program is the ability of the company to manage employee absenteeism, an issue that has been shown time and again to detract from a company's performance and profitability, and it is this issue that forms the basis for this pilot project which is discussed further below.

Preliminary Review of the Literature

While companies differ in the specific manner in which they estimate the costs that are associated with absenteeism, it is clear that these costs are on the rise and have been for several years (Avey, Patera & West

2006). According to Avey and his associates, "Absenteeism levels in the U.S. reached a five-year high in 2004, with related costs estimated to range from $60,000 to more than $1 million annually for small and large companies, respectively" (42). These trends represent a clarion call to action for human resource managers seeking to solidify their role as a strategic partner in helping their organizations achieve their goals and grow their businesses (Avey et al. 2006). Therefore, effective HRM initiatives that target absenteeism represent a viable area in which human resource managers can help reduce these costs and improve productivity (Avey et al. 2006). According to these authors, "In order to accomplish this goal, researchers and practitioners must first seek to understand potential predictors of absenteeism behavior that may be incorporated into selection systems and lead to developmental programs aimed at reducing absenteeism behavior within organizations" (Avey et al. 2006, 42).

Indeed, by virtually any measure, the costs that are associated with employee absenteeism can be enormous, but these costs transcend the individual companies that are involved to include the national economies in the countries in which larger corporations compete. For example, Buschak, Craven and Ledman (1999) emphasize that, "Unauthorized or unscheduled absenteeism is a problem for every organization or business. It creates cost and productivity problems, puts an unfair burden on the majority of employees who show up for work, ultimately hinders customer satisfaction, and drains the country's economy" (26). This point is also made by Solomon (2002) who emphasizes that besides larger corporations, inordinately high absenteeism levels among even small- to medium-sized enterprises can have a cumulative effect on a nation's economy. According to Solomon, "On a nationwide basis, one of the biggest contributors to non-productivity is the fact that people aren't at work. In order to be productive, you have to have people on the job" (28).

This is a particularly salient point given the current global economic downturn, and it is important to squeeze every drop of productivity out of employees in order to survive. Indeed, according to Austin (2006), "Absenteeism is costly. According to the Society for Human Resources Management, absenteeism costs employers roughly $600 per employee every year, and this number does not factor in lost productivity, overtime for other employees, or the cost of using temps" (1). With tens of thousands of employees, it is apparent that left unchecked, absenteeism could cost companies such as Exxon Mobil tens of millions of dollars in lost productivity over the course of a single year, but this is just part of the costs that are associated with the absenteeism equation. This point is made by Hugh Murray (2003), author of a new training video entitled, "Challenging Absenteeism." According to Murray, "The damage done by absence is huge. The salary cost of workers who are away is only the tip of the iceberg. Absence damages the morale of people who cover for those absent and deprives organisations of skills and knowledge making planning impossible and playing havoc with productivity" (9).

The adage, "decisions are made by those who show up" certainly holds true in the 21st century, and Buschak and her associates point out that, "Experience shows that better attendance is synonymous with better quality, lower costs, and greater productivity" (27). Unfortunately, virtually every company tends to experience some level of employee absenteeism. For instance, according to Miller, Murnane and Willett (2008), "Rates of absenteeism and the effects of employee absences on productivity are topics of conversation in many organizations in many countries. One reason is that high rates of employee absence may signal weak management and poor labor-management relations. A second reason is that reducing rates of employee absence may be an effective way to improve productivity" (71).

The research to date has shown that employee absenteeism is responsive to formal as well as informal employment policies; for instance, absenteeism levels have been found to be positively associated with the amount of leave provided by a company, as well as the amount of days of paid sick or personal leave that are allowed to be resold to the company (Miller et al. 2008). In addition, absenteeism levels have been reduced when employers implement incentive programs such as buy-backs of unused sick leave or the provision of bonuses for employees with outstanding attendance rates (Miller et al. 2008). One of the key factors that has been shown to contribute to higher levels of employee absenteeism is substance abuse. Studies have shown time and again that employee assistance programs (EAPs) can help reduce the incidence of substance abuse in the workplace (Starr 2002).

Research Strategy

The research strategy used by this pilot project was a qualitative analysis of the relevant peer-reviewed, scholarly and organizational literature concerning absenteeism in general and absenteeism at Mobil in particular to identify past successes and potential opportunities for improvement in effectively managing the company's absenteeism levels.

Summary and Conclusion

The research showed that Exxon Mobil is the world's largest publicly traded international oil and gas company with operations in the United States, Africa, Canada, Europe, the Asia Pacific, the Middle East, Russia/Caspian region, and South America. It is reasonable to conclude that the company did not achieve this level of success without some informed and effective human resource management practices. In this regard, the research also showed that with tens of thousands of employees, the company stands to lose or gain a great deal in the manner in which it manages its employee absences. The company has been aggressive in its approach to managing its absenteeism problem, though, and what has been published confirms that Exxon Mobil takes the matter very seriously. Although the company was shown to traditionally make every effort to accommodate all of its employees' special needs, the research also showed that the company did not achieve its level of global success by allowing some employees to manipulate and exploit its generous human resource policies and practices, but rather has consistently sought to establish a corporate culture that emphasizes the need to be at work every day irrespective of any personal problems that might interfere. When Mobil employees experience such personal problems, though, the company has implemented a series of employee assistance programs that are specifically intended to address these issues in an effort to help employees return to meaningful employment as quickly as possible. The findings of this pilot project represent a useful point of departure for future studies that more closely examine the effects of EAPs on managing absenteeism at Mobil as well as what leadership initiatives have been used to promote a corporate culture that creates a working environment that is conducive to reducing absenteeism rates in the different countries in which the company competes in order to identify any relevant cross-cultural factors that should be taken into account.